28 - Which of the following statements is CORRECT? The higher the correlation between the stocks in a portfolio, the lower the risk inherent in the portfolio. An investor can eliminate almost all risk if he or she holds a very large and well diversified portfolio of stocks. Once a portfolio has about 40 stocks, adding additional stocks will not reduce its risk by even a small amount. An investor can eliminate almost all diversifiable risk if he or she holds a very large, well-diversified portfolio of stocks. An investor can eliminate almost all market risk if he or she holds a very large and well diversified portfolio of stocks.
28 - Which of the following statements is CORRECT? The higher the correlation between the stocks in a portfolio, the lower the risk inherent in the portfolio. An investor can eliminate almost all risk if he or she holds a very large and well diversified portfolio of stocks. Once a portfolio has about 40 stocks, adding additional stocks will not reduce its risk by even a small amount. An investor can eliminate almost all diversifiable risk if he or she holds a very large, well-diversified portfolio of stocks. An investor can eliminate almost all market risk if he or she holds a very large and well diversified portfolio of stocks.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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28 - Which of the following statements is CORRECT?
- The higher the correlation between the stocks in a portfolio, the lower the risk inherent in the portfolio.
- An investor can eliminate almost all risk if he or she holds a very large and well diversified portfolio of stocks.
- Once a portfolio has about 40 stocks, adding additional stocks will not reduce its risk by even a small amount.
- An investor can eliminate almost all diversifiable risk if he or she holds a very large, well-diversified portfolio of stocks.
- An investor can eliminate almost all market risk if he or she holds a very large and well diversified portfolio of stocks.
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